She wrote that article because leftists at the time were pushing a so-called Paycheck Fairness Act that would have given the government powers to second guess compensation levels produced by the private marketplace.

For all intents and purposes, proponents were arguing that employers were deliberately and systematically sacrificing profits by paying men more than they were worth (which is the unavoidable flip side of arguing that women were paid less than they were worth).

Well, bad ideas never die and the Senate recently took up this statist proposal.

That’s the bad news. The good news is that it didn’t get enough votes to overcome a procedural objection.

Groups like the National Organization for Women insist that women are being cheated out of 24 percent of their salary. The pay equity bill is driven by indignation at this supposed injustice. Yet no competent labor economist takes the NOW perspective seriously. An analysis of more than 50 peer-reviewed papers, commissioned by the Labor Department, found that the so-called wage gap is mostly, and perhaps entirely, an artifact of the different choices men and women make—different fields of study, different professions, different balances between home and work. …The misnamed Paycheck Fairness Act is a special-interest bill for litigators and aggrieved women’s groups. A core provision would encourage class-action lawsuits and force defendants to settle under threat of uncapped punitive damages. Employers would be liable not only for intentional discrimination (banned long ago) but for the “lingering effects of past discrimination.” What does that mean? Employers have no idea. …Census data from 2008 show that single, childless women in their 20s now earn 8 percent more on average than their male counterparts in metropolitan areas.

At the risk of sounding extreme (perish the thought), let me take Ms. Summers argument one step farther. Yes, it would be costly and inefficient to let trial lawyers and bureaucrats go after private companies for private compensation decisions.

But what’s really at stake is whether we want resources to be allocated by market forces instead of political edicts.

This should be a no-brainer. If we look at the failure of central planning in the Soviet Union and elsewhere, a fundamental problem was that government officials – even assuming intelligence and good intentions – did not have the knowledge needed to make decisions on prices.

And in the absence of a functioning price system, resources get misallocated and growth suffers. So you can imagine the potential damage of giving politicians, bureaucrats, and courts the ability to act as central planners for the wage system.

But that didn’t stop the economic illiterates in Washington from pushing a vote in the Senate.

President Barack Obama said it would merely mandate “equal pay for equal work.” Senate Democratic Leader Harry Reid of Nevada warned beforehand that failing to pass the bill would send “the message to little girls across the country that their work is less valuable because they happened to be born female.” …This is a myth resting on a deception. …The gap reflects many benign factors stemming from the choices voluntarily made by women and men. …Women, on average, work fewer hours and are more likely than men to take time off for family duties. A 2009 report commissioned by the U.S. Labor Department concluded that such “factors account for a major portion and, possibly, almost all of the raw gender wage gap.” “The gender gap shrinks to between 8 percent and 0 percent when the study incorporates such measures as work experience, career breaks and part-time work,” Baruch College economist June O’Neill has written. …What the alleged gender pay gap reflects is the interaction of supply and demand in a competitive labor market. Even in a slow economy, companies that mistreat women can expect to lose them to rival employers.

17 Responses

If women can be done away with by paying them less, then employers can potentially reap huge profits by hiring all-female workforce! Perhaps employers are so stupid that they haven’t yet discovered this advantage!

Every Obama voter I’ve spoken with has listed “fairness” as the reason for their vote, they just want “everything to be fair”. When I point out that life itself is not fair, and no government program has ever been shown to make it so, they say, “We still have to try to make it fair”.

And we are back to cars fueled by unicorn farts. Except this is worse than that since under the guise of “helping” they do great harm.

What leftists are saying is not “equal pay for equal work” — as opposed to the presumed “unequal pay for unequal work” promoted by the rightists. What leftists are saying is that just because women have statistically different priorities and choose to do less work over their lifetimes does not mean that they should be paid less. Leftists believe that since women have, statistically, somewhat different priorities in terms of the satisfaction they get throughout life from working versus raising families, there needs to be an active transfer of wealth from those who are born with statistically higher propensity to work (presumably men) to those who are born with statistically higher propensity to raise children (presumably women).

By extension, leftists believe that one is more or less entitled to centrally and actively equalized pay (or at least an actively managed flatter effort-reward curve, read wealth transfers) regardless of what they like to do, i.e. regardless of whether there is strong or weak consumption demand for whatever products and services one finds enjoyable to produce.

So leftists believe that just because a person loves scuba diving in the Caribbean at taxpayer expense, riding dolphins to study the polka-dot striped sea turtle in an aquatic park where most other mortals have been banned from entering, does not mean that our lucky sunbather on an almost perpetual exclusive tropical vacation, who likes to do something seventy percent of the world population would also love to do, should be earning any less than an Australian miner working three miles of rock below sea level, or a CEO squeezing his unique brain trying to extract another one percent of return on investment.

In any case, this will all soon become a mute point. It is only a matter of time before ObamaCare and its successor entitlements make sex change operations a guaranteed right. You will then be able to choose, at someone else’s expense, the sex you believe has the best deal in life – or — choose to join the sex that has the highest chance of winning class action lawsuits. What? Did I hear someone saying that all this will distract from real productivity? Oh come on now, that is so passé . Everyone knows that most prosperity comes down to earth magically, from the head of Zeus. Humans need only occupy themselves with its fair distribution…

Virtually all political initiatives now active in America have an end result of flattening the effort-reward curves – and the electorate just loves it — America’s decline is accelerating – Genghis Khan et al will take no prisoners amongst the spoiled and greedy top ten percent of the world (the American middle class) who took up arms against the top one percent, flattened the traditional and naturally steeper American effort-reward curves and brought about America’s decline into worldwide averagedom.

Voter mentality reverting to worldwide averages begets average worldwide prosperity. There is no way around that — there are no perpetual motion machines of prosperity. The point of no return has passed. Now, riding a permanent severely sub-par two percent growth trendline into worldwide averagedom. The many facets of the cranky mood you see all around you is just a manifestation of this tumultuous but self-inflicted change of fortunes befalling the western world in this early twenty first century. HopNChangeNot. HOPE that we can CHANGE to flatter European style effort-reward curves and NOT decline. Fat chance.

Druids from the left don’t get the consequences of their actions and also fail to look at why there appears to be “some income inequality” I was a small business owner, the minimum wage kept me from giving young kids their first shot at a real job where they could learn something useful to further their way into another career. Since the Marx Brothers, want to tell us what to pay women the answer there is easy, don’t hire them. Your spot is one of the most important and interesting on the net Dan, I use your material frequently, J.C.

[…] Hoff Summers. And I cited more of her work, as well as some analysis by Steve Chapman, when writing about the topic in 2012. The bottom line is that rigorous analysis finds that the so-called gender gap largely […]

[…] Hoff Summers. And I cited more of her work, as well as some analysis by Steve Chapman, when writing about the topic in 2012. The bottom line is that rigorous analysis finds that the so-called gender gap largely […]

[…] This is why “paycheck fairness” proposals to address the supposed “gender pay gap” are so risky for prosperity. It’s no exaggeration to say that these “comparable worth” schemes are designed to empower bureaucrats and politicians to override market forces. […]